First True Investment Property

[Deone Doctors]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $126,000
Cash invested: $20,000

Mother-In-Law Suite

What made you interested in investing in this type of deal?

It was an excellent price, right next a relatively prestigious Private University, in a neighborhood that had been increasing in value faster than the rest of the city (Tulsa).

How did you find this deal and how did you negotiate it?

My father died and my step mother was liquidating. She gave me a great price. On top of which we were able to use the discounted amount as a "gift of equity" which the bank counted as a portion of the down payment.

My mother in law already lived in the house, and was going to have to move if I didn't buy it. Renting to family and friends is actually in my business plan NOT to do. But I love her. (Plus the house is perfect for family gatherings, and I don't want to have to host them.)

How did you finance this deal?

Traditional financing (30 year fixed at just under 5%) with a regional bank.

How did you add value to the deal?

I got the already great price lowered a little more as it needed a new Central Heat and Air unit right after purchase which was a pretty big expenditure.

What was the outcome?

I started out with at least 33% equity, which isn't bad on day one. There is also lots of opportunities for forced equity.

With dumb math, I'm making roughly 100 dollars a month.

The deal isn't so sweet when I include vacancy, of which there has not been any yet, capex, wear and tear, and time/management (still self managing of course).

However, I could easily rent it for 150-300 more.

Lessons learned? Challenges?

The lender helped me close pretty fast. Using traditional financing we got it within a month from phone to paper. But that seems like the fastest it can happen. Closing is important because my day job (Pipeliner) is cyclical and project dependent. And "proof of income" can be a sticky spot.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I worked with Julio Gomez at BOK and Emily Coppola at Wells Fargo. Both of which I highly recommend.